2017 (10) TMI 361 - AT - Customs

Smuggling - Benefit of the proviso to sub-section (2) of Section 120 of the Customs Act, 1962 - import of heavy melting scrap, on examination it was found to contain steel bars - Held that - in terms of Section 120(2), the whole of the goods will become liable for confiscation only when smuggled goods cannot be separated from other goods - In the instant case, it is already on record of examination report that only certain percentage of the goods are prime goods and remaining is Heavy Melting Scrap as declared. Thus the portion of the goods which is found to be Heavy melting scrap as declared will not be liable for confiscation - redemption fine and penalty recomputed. The invoices, bills of lading and pre-shipment inspection certificates show the goods as heavy melting steel scrap. Since there is no contrary evidence, the benefit of doubt given to the importer and it was held that the importer had no knowledge or reason to believe that the imported consignment included any smuggled goods. Decided partly in favor of importer.

Summary

Issues:
Classification of imported goods as scrap or steel bars, mis-declaration of goods, imposition of fine and penalty, entitlement to benefit under Section 120(2) of Customs Act, 1962.

Classification of Imported Goods:
The appeal involved the classification of imported goods as scrap or steel bars, leading to a dispute regarding the appropriate duties to be levied. The goods declared as heavy melting scrap were found to contain prime quality steel rods, prompting the Commissioner to classify them under a different heading and impose applicable duties. The importer claimed they ordered only scrap items and offered to pay differential duty due to difficulties in segregation and weighment.

Mis-Declaration of Goods:
The Commissioner held that the goods were mis-declared, leading to confiscation under Section 111(m) of the Customs Act, 1962, for mis-declaration of description and value. The importer was also penalized under Section 112 of the Customs Act. The goods were confiscated but allowed to be redeemed on payment of a fine and penalty.

Entitlement to Benefit under Section 120(2):
The Tribunal remanded the case to the Commissioner to determine if the appellant was entitled to the benefit of the proviso to sub-section (2) of Section 120 of the Customs Act, 1962. This would impact the extent of confiscation and the calculation of redemption fine and penalty. The Commissioner revised the fine and penalty proportionately based on the Tribunal's directions.

Analysis:
The judicial member upheld the impugned order, noting that the Commissioner had followed the Tribunal's directions in reducing the quantum of fine and penalty. The Commissioner observed that the goods were declared as heavy melting steel scrap in documents, and since there was no contrary evidence, the benefit of doubt was given to the importer. The portion of goods found to be heavy melting scrap as declared was not liable for confiscation. The order was deemed to be in line with the Tribunal's remand directions, leading to the dismissal of the appeal.

This detailed analysis covers the issues of classification, mis-declaration, and entitlement to benefits under the Customs Act, providing a comprehensive overview of the judgment and its implications for the parties involved.